U.S. equities are continuing their recent push higher on Monday, led once again by the performance of small-cap stocks in the Russell 2000. From its mid-August low, the index is up more than 11% in an impressive, near-vertical rise.
The catalyst for the move has been calming tensions with North Korea, the release of President Trump’s tax cut proposal (with a focus on corporate taxes) and the relative calm that greeted the Federal Reserve’s debut of “quantitative tightening” at its last policy meeting.
Glamorous big-tech stocks like Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) that put in such strong performances in July and August are taking a breather now, allowing fresh faces to come off the bench in areas like energy and financials. Biotech stocks are playing along as well now, with the group breaking up and out of a two-month consolidation range after a flurry of buying interest in late August.
With that as a backdrop, here are four biotech stocks to buy, and one ETF, benefiting from the move:
The ETF: iShares Biotech ETF (IBB)
The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) is popping higher today, pushing above its upper Bollinger Band for the first time since late August. The catalyst comes from the regulatory front: Food and Drug Administration Commissioner Scott Gottlieb said that as part of the FDA’s Drug Competition Action Plan, it is looking to streamline generic drug approval processes.
This seems to be generating broad-based buying interest, which isn’t surprising in these days of computer-based trading algorithms that merely see the buying interest and want to follow.
Biotech Stocks to Buy: Regeneron Pharmaceuticals (REGN)
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) shares are up 3% in mid-day trading Monday, filling the gap from an early September decline to take the fight back to its 50-day moving average. Watch for a move back to resistance from the $500-a-share level, which would be worth a near 9% gain from here.
REGN will next report results on Nov. 3 before the bell. Analysts are looking for earnings of $3.85 per share on revenues of $1.5 billion. When the company last reported on Aug. 3, earnings of $4.17 beat estimates by 99 cents on a 21.2% rise in revenues.
Biotech Stocks to Buy: Allergan (AGN)
Allergan plc Ordinary Shares (NYSE:AGN) is rising 2.9% off key technical support as a test of the January 2017 lows seems to be holding. Watch for a run at the July highs near $255, which would be worth a gain of roughly 20% from here. On Monday, the company reported that the FDA had accepted a new use for an existing drug to help treat pneumonia caused by ventilator use during hospital stays.
AGN will next report results on Nov. 2 before the market opens. Analysts are looking for earnings of $4.08 per share on revenues of just over $4 billion. When the company last reported on Aug. 3, earnings of $4.02 beat estimates by 10 cents on an 8.8% rise in revenues.
Biotech Stocks to Buy: Gilead (GILD)
Gilead Sciences, Inc. (NASDAQ:GILD) shares are perking up and they look ready to emerge from a multi-week consolidation range near recent highs. The move caps a 30% rally off of its May-June lows that ended a long downtrend that started way back in June 2015. Watch for a move to the early 2016 reaction high near $97.50, which would be worth a gain of roughly 19% from here.
GILD will next report results on Oct. 26. Analysts are looking for earnings of $2.13 per share on revenues of $6.4 billion. When the company last reported on July 26, earnings of $2.56 per share beat estimates by 39 cents on a 8.2% drop in revenues.
Biotech Stocks to Buy: Biogen (BIIB)
Biogen Inc (NASDAQ:BIIB) shares look ready to exit a month-long pullback after losing about 10% from the highs set in early September. This follows a test of the 50-day moving average down near the $300-a-share level. The stock was recently defended by analysts at Mizuho after selling pressure materialized in the wake of patient deaths during treatment by the company’s Spinraza drug.
BIIB will next report results on Oct. 24 before the bell. Analysts are looking for earnings of $5.65 per share on revenues of $3 billion. The company last reported results on July 25, with earnings of $5.04 per share beating estimates by 67 cents on a 6.4% rise in revenues.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
